Quick answer
Unsecured business loans don't need property as security, so lenders rely on your bank statements: turnover, consistency and how the account is run. Some specialist lenders will consider bad credit, paid defaults and past declines if recent trading is strong. Amounts typically range from $5,000 to $500,000, terms are shorter than secured loans, and a director's guarantee is usually required.
Key points
- No property needed: the loan is sized on turnover in your bank statements.
- Bad credit is considered case by case, especially if it's explained and resolved.
- Typically $5,000 to $500,000, with shorter terms than secured loans.
- A personal guarantee from directors is usually part of the deal.
- Range
- Typically $5k – $500k
- Security
- None (director guarantee usual)
- Assessment
- 6 – 12 months statements
- Credit check to enquire
- None
Not everyone has property to borrow against, and not everyone wants to put their home on the line for the business. Unsecured business loans fill that gap. Instead of a mortgage, the lender relies on the business’s trading, usually read directly from your bank statements, and on a guarantee from the directors. With the right lender, that’s possible even when your credit file has a few scars.
How unsecured lenders assess you
| What they look at | What helps |
|---|---|
| Monthly turnover | Consistent deposits from customers, not transfers between accounts |
| Account conduct | Few or no dishonours; balance not constantly overdrawn |
| Existing lenders | No stack of daily or weekly loan repayments |
| Trading history | Usually at least six to twelve months |
| Credit file | Paid or explained defaults; nothing recent and unresolved |
| Industry | Some lenders avoid certain sectors; others specialise in them |
Bank statements carry most of the weight. Many lenders connect to them electronically, with your permission, to see the full picture quickly.
Bad credit and unsecured loans
A bad credit file narrows the field but doesn’t close it. Specialist lenders will consider:
- Paid defaults, especially older ones
- Defaults with a clear explanation, such as a dispute or a one-off crisis
- Past declines from banks, provided you haven’t applied everywhere since
- A low score caused by enquiries rather than missed payments
What’s harder: recent unpaid defaults, court judgments, current insolvency, and a pattern of not paying. In those cases, property-secured options like caveat loans are usually a better fit. See bad credit business loans for the full picture.
What you can borrow for
- Stock and inventory
- Wages and payroll peaks
- Marketing and growth
- Tax and BAS catch-ups, in some cases
- Repairs and small equipment
- Bridging a gap until customer payments arrive
Term loan or line of credit?
For a one-off need with a clear amount, an unsecured term loan works well. For ongoing, variable needs, a line of credit is usually more efficient, because you only pay for what you use. Many owners start with one and add the other later.
Watch the repayment structure
The structure matters as much as the amount. Daily or weekly repayments can be manageable for businesses with daily takings, like retail and hospitality, but painful for businesses paid monthly. They also show up as a red flag when you next apply for finance. Where possible, choose a repayment frequency that matches when your money comes in. If you already have several short-term loans, read too much existing debt before adding another.
Costs to understand
Unsecured loans usually cost more than secured loans, and bad credit can add to that. We don’t publish rates. Ask for the total repayable amount in dollars, all fees, the repayment frequency and amount, and the cost of repaying early. Some short-term loans charge the full cost even if you repay early, which changes the maths if you plan to refinance.
An illustrative example
A Darwin air-conditioning and refrigeration business (illustrative only) needed $75,000 for stock and an extra technician ahead of the build-up season. The owner rented their home, had a paid telco default and an old car loan default from a previous relationship, and had been declined by the bank. Twelve months of business statements showed strong, steady deposits and no other lenders. A specialist unsecured lender approved the full amount over eighteen months with monthly repayments, after a short written explanation of the defaults.
How to grow your limit over time
Many owners with bruised credit start with a smaller unsecured approval than they hoped for. That’s not a dead end. Lenders reward good conduct, and a first loan repaid on time is the best evidence you can give for the next one. To build towards bigger and cheaper approvals:
- Make every repayment on time, and keep the business account out of overdraft
- Avoid taking on extra short-term loans from other lenders while the first one runs
- Keep running all income through the business account so turnover is visible
- Clear or settle any outstanding defaults when you can, and ask for the listing to be updated
- Ask the lender about a top-up or a larger facility once you’ve built six months or so of clean history
After a year or two of clean conduct, refinancing to a lower-cost lender or adding a line of credit often becomes realistic.
Getting ready
- Download six to twelve months of business bank statements, every page
- Check your credit reports so you know what lenders will see
- Write a short explanation of any defaults or past problems
- List any existing loans and their repayments
- Know exactly how much you need and what it’s for
See what’s possible without property
If you don’t own property and the bank said no, send us a 60-second enquiry. There’s no credit check when you first enquire, we won’t spray your details around to a pile of lenders, and a real person will look at your statements and your story. Please be accurate about your turnover and existing debts on the form so we can find the right lender first time. See if you qualify.
Frequently asked questions
How much can I borrow unsecured with bad credit?
It depends mainly on your monthly turnover, how steady it is, and your other debts. Bad credit may reduce the amount or shorten the term. Lenders often size unsecured loans as a proportion of monthly turnover, but every lender has its own rules.
What will make an unsecured lender decline?
Frequent dishonoured payments, the balance regularly in overdraft, several other lenders already being repaid from the account, recent unpaid defaults, unexplained large transfers, or turnover too low for the amount requested.
Do I need to sign a personal guarantee?
Usually, yes. Directors are generally asked to guarantee unsecured business loans. It means you can be personally liable if the business can't repay, so read it carefully and get advice if you're unsure.
Are unsecured loans repaid daily or weekly?
Some are, especially short-term online loans. Others are monthly or fortnightly. Ask before you sign, because daily repayments can put real pressure on cash flow and make future borrowing harder.